Con­cern and con­fu­sion sur­rounds CWB pri­va­ti­za­tion

The Southwest Booster - - NEWS - FARM­ERS OF NORTH AMER­ICA

Farm­ers are telling us they are deeply dis­turbed about the CWB pri­va­ti­za­tion process. Re­cently, Farm­ers of North Amer­ica (FNA) learned that their bid to ac­quire the CWB, backed by strong farmer-in­ter­est, was re­jected. This is a clear mes­sage that there is no in­ter­est from CWB man­age­ment to in­clude farm­ers in a mean­ing­ful way in the pri­va­ti­za­tion process.

The con­fus­ing part is that, now CWB man­age­ment is say­ing they are sur­prised that FNA thinks they're out of time to reach out to farm­ers and raise ad­e­quate eq­uity for a suc­cess­ful bid. If farm­ers are not out of time, then the rea­son for re­ject­ing the farmer bid is…just be­cause it's a farmer bid? Or con­trary to what CWB man­age­ment claims, it is a time is­sue. Farm­ers will eas­ily be­lieve ei­ther one. What they will not be­lieve, is that FNA, a farm­ers' business al­liance, would have both­ered them dur­ing a very dif­fi­cult har­vest sea­son if it was not a time is­sue.

Doc­u­men­ta­tion

con- firms that FNA only re­ceived clear­ance from CWB man­age­ment on what they could talk to farm­ers about early in Septem­ber, 2014. On Oc­to­ber 20, CWB in­formed the farmer bid that it was be­ing re­jected. That is just over a month. Even at that, over 1000 farm­ers ex­pressed in­ter­est in in­vest­ing 50 mil­lion dol­lars in the project. What would have been the harm in telling farm­ers they could have some ad­di­tional time to talk to other farm­ers if "they're not out of time", and/or to fin­ish ne­go­ti­a­tions with in­ter­ested strate­gic in­vestors?

Farm­ers are also not im­pressed with the at­tempted spin by the CWB on whether it's a sale, part­ner­ship, or sim­ply an eq­uity in­vest­ment. The fact is, the CWB is look­ing for a majority owner and can ap­par­ently pro­vide no as­sur­ance that the farm­ers' trust is guar­an­teed to be at a mean­ing­ful level, how soon it will reach that level, that it will not be di­luted, and that the majority owner will not sim­ply buy it out after a few years.

While there has been a lot of me­dia spec­u­la­tion on the el­e­ments of the CWB pri­va­ti­za­tion process, farm­ers need to con­sider what a pri­va­tized CWB looks like:

By re­ject­ing the farmer bid the CWB ba­si­cally told farm­ers to take a hike, yet when some company is suc­cess­ful in ac­quir­ing majority own­er­ship of the CWB, they will ex­pect farm­ers to de­liver to them any­way. What part of this is hard for them to un­der­stand? Pri­va­ti­za­tion, as it cur­rently stands, will largely leave farm­ers out of the equa­tion. A farmer majority owned company would build de­liv­ery vol­ume through farmer loy­alty to cre­ate fi­nan­cial sus­tain­abil­ity, both for the company and for the farm­ers.

The CWB started a Pro­ducer Eq­uity Plan to rep­re­sent farmer own­er­ship. After read­ing their pub­lic dis­clo­sure doc­u­ment on the Plan, judge for your­self how much con­fi­dence you have that it will cre­ate a mean­ing­ful level of farmer own­er­ship. How much farmer own­er­ship has been achieved over the last two years and how much farmer own­er­ship will be al­lowed and hon­ored by the new majority owner, and for how long?

A ma­jor ex­ist­ing grain company, or any other buyer for that mat­ter, ac­quires majority own­er­ship of the CWB, as­sumes own­er­ship of the as­sets and keeps its own pur­chase money to build out the company. How will this ad­dress the ex­ces­sive mar­gins com­pa­nies were mak­ing over the last year by dis­count­ing the price to farm­ers and how will it trans­form grain han­dling and mar­ket­ing mar­gins from pure costs to farm­ers, into rev­enue for farm­ers?

The as­sets that the CWB has (el­e­va­tors, build­ing, peo­ple, mis­sion ter­mi­nal, hop­per cars, etc.) that would have al­lowed farm­ers to hit the ground run­ning to build a farmer­ma­jor­ity owned glob­ally com­pet­i­tive grain company now be­come the prop­erty of some other company. How will this change the in­dus­try land­scape to ben­e­fit farm­ers, to bet­ter po­si­tion farm­ers in the mar­ket­place and in the grain han­dling sec­tor?

A company that is suc­cess­ful in ac­quir­ing majority own­er­ship of the CWB will also as­sume own­er­ship of the CWB hop­per cars. Imag­ine the sit­u­a­tion if the CWB car fleet dis­ap­pears into the North Amer­i­can sys­tem once the CWB be­comes ac­quired by one of the large multi­na­tion­als. Suf­fice it to say, that company will con­trol the very as­sets farm­ers re­quire to move their grain to mar­ket. There are no op­tions for the hop­per cars; farm­ers are com­pletely de­pen­dent on them. It is well un­der­stood by many grain mar­ket spe­cial­ists that who­ever con­trols the car fleet, con­trols the en­tire sys­tem. Should that con­trol be in the hands of farm­ers or in the hands of another company that could ei­ther sell the fleet or use the cars in some other North Amer­i­can mar­ket that pays a pre­mium, cer­tainly not to the ben­e­fit of Cana­dian farm­ers?

Farm­ers are not in­ter­ested in the CWB for nos­tal­gic or ide­o­log­i­cal rea­sons. They rec­og­nize that the ac­qui­si­tion of the CWB is a great com­mer­cial op­por­tu­nity, es­pe­cially given the unique trans­ac­tion terms. It is their op­por­tu­nity to own, and ac­crue ben­e­fits from, the value chain. Farm­ers en­vi­sion it to be run by in­dus­try ex­perts to op­ti­mum in­dus­try stan­dards, in­de­pen­dent of gov­ern­ment, with no ex­pec­ta­tions of gov­ern­ment as­sis­tance or in­volve­ment in the fu­ture.

They cer­tainly rec­og­nize that to ac­crue ben­e­fits from the value chain, farm­ers have to own part of that value chain. In the grain in­dus­try, with­out farm­ers in an own­er­ship po­si­tion, new own­er­ship will change NOTH­ING. Think of it this way, wouldn't you have rather been the grain company this past year? Farm­ers are deeply frus­trated with the dis­counted prices of­fered by Cana­dian grain com­pa­nies over the last year, and rightly so. Un­less farm­ers have majority own­er­ship of a glob­ally com­pet­i­tive grain company NOTH­ING will change.

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